2010 (9) TMI 381

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f the case, the Hon'ble I.T.A.T. was justified in law in allowing assessee's claim of deduction under Section 80 HHC of the I.T. Act, 1961 by placing reliance on the order of the Hon'ble Bombay High Court in the case of Sudershan Chemical Industries Ltd. Vs. CIT (245 ITR 769), ignoring the order of the Hon'ble Supreme Court in the case of Chowringee Sales Bureau Vs. CIT (87 ITR 542) wherein it has been held that the excise duty is to be included in the total turnover for the purpose of computation of deduction u/s 80HHC of the I.T. Act, 1961?"   The Income Tax Appellate Tribunal while deciding Ground No.2 followed the judgment of the Bombay High Court in Sudarshan Chemicals Industries Ltd., (2000) 112 Taxman 511 (Bom). The Bombay High....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....lowed in CTT Vs. Ramco Industries Ltd., 316 ITR 434 by the Madras High Court.   The reasoning giving by the Supreme Court in CIT Vs. Lakshmi Machine Works (Supra) is that tax under the Act is upon the income, profits and gains. It is not a tax on gross receipts.? Under Section 2 (24) of the Act the word 'income' includes profits and gains. The charge is not on gross receipts but on profits and gains. The charge is not on profits and gains, properly so called. The gross receipts or sale proceeds, include profits. The profits in Section 28 should be understood in normal and proper sense; subject to special requirement of income tax, profits have to be assessed, provided or real profits to be ascertained on ordinary principles of commerc....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Taxes (Income tax) Ready Reckoner, of the relevant word. In the circumstances, we cannot interpret the words "total turnover" in the above formula with reference to the definition of the word "turnover" in other laws, like Central Sales Tax or as defined in accounting principles. Goods for export do not incur excise duty liability. As stated above, even commission and interest formed a part of the profit and loss account, however, they were not eligible for deduction under Section 80HHC. They were not eligible even without the clarification introduced by the legislature by various amendments because they did not involve any element of turnover. Further, in all other provisions of the income tax, profits and gains were required to be compute....